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GLENN: I apologize for being late. Lincoln is an Ohio chartered corporation, and... GLENN: Well, Lincoln is wholly owned by ACC. (Keating's American Continental Corp.) DECONCINI: You said Lincoln was Ohio chartered. It’s California. GLENN: Well, in any event, ACC is an Ohio chartered corporation. I’ve known them for a long time but it wouldn’t matter if I didn’t. Ordinary exams take maybe up to 6 months. Even the accounting firm says you’ve taken an unusually adversary view toward Lincoln. To be blunt, you should charge them or get off their backs. If things are bad there, get to them. Their view is that they took a failing business and put it back on its feet. It’s now viable and profitable. They took it off the endangered species list. Why has the exam dragged on and on? I asked Gray about his. Lincoln has been told numerous times that the exam is being directed to continue by Washington. Gray said this wasn’t true. RIEGLE: I wasn’t present at the earlier meeting. There are things happening that may indicate a pattern that do raise questions [sic]. There is broad concern on the Banking Committee about the American Banker article on the FADA and FSLIC feud. Gray has great confidence in you as a team. He says you are some of the finest people in the system. The appearance from a distance is that this thing is out of control and has become a struggle between Keating and Gray, two people I gather who have never even met. The appearance is that it’s a fight to a death. This discredits everyone if it becomes the perception. If there are fundamental problems at Lincoln, OK. I’ve had a lot of people come through the door feeling that they’ve been put through a meat grinder. I want professionalism, and your backgrounds attest to that professionalism. But I want not just professionalism, but fairness and the appearance of fairness. So I’m very glad to have this opportunity to hear your side of the story. GLENN: I’m not trying to get anyone off. If there is wrongdoing I’m on your side. But I don’t want any unfairness against a viable entity. CIRONA : How long do we have to speak to you? A half-hour, an hour? DECONCINI: As quickly as possible. We have a vote coming up soon. CIRONA: First, if there’s any fault to be had concerning the length of the examination, it’s on my shoulders. We determine how examinations are conducted. Gray never gave me instructions on how to conduct this exam or any other exam. At this meeting you’ll hear things that Gray doesn’t know. DECONCINI: Did Gray ever talk to you about the examination of Lincoln? CIRONA: Gray talked to me when that article ran in the Washington Post. We received no instructions from Gray about the exam of Lincoln. We decide how to do the exam. CIRONA: This meeting is very unusual... to discuss a particular company. DECONCINI: It’s very unusual for us to have a company that could be put out of business by its regulators. Richard, you’re on; you have 10-12 minutes. SANCHEZ: An appraisal is an important part of underwriting. It is very important. If you don’t do it right you expose yourself to loss. Our 1984 exam showed significant appraisal deficiencies. Mr. Keating promised to correct the problem. Our 1986 exam showed that the problems had not been corrected – that there were huge appraisal problems. There was no meaningful underwriting on most loans. We have independent appraisals. Merrill Lynch appraised the Phoenician [Hotel]. It shows a significant loss. Other loans had similar losses. DECONCINI: Why not get an independent appraisal?
Stephen Pizzo has been published everywhere from The New York Times to Mother Jones magazine. His book, Inside Job: The Looting of America's Savings and Loans, was nominated for a Pulitzer.
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